Union Pacific Corporation · NYSE:UNP
Union Pacific — Q4 2022 Earnings Presentation
13 slides from Union Pacific's earnings presentation, Jan 24, 2023
Slide 1: Fourth Quarter 2022 Earnings Release
FOURTH QUARTER 2022 EARNINGS RELEASE Lance Fritz, Chairman, President, & CEO January 24, 2023 Fourth Quarter 2022 Results Earnings Per Share Operating Ratio $2.66 $2.67 61.0% Flat 57.4% 3.6 pts vs 2021 vs 2021 4Q 2021 4Q 2022 4Q 2021 4Q 2022 Key Themes Network Inefficiencies and Higher Fuel Price an
Slide 2: Marketing & Sales Review: Bulk
FOURTH QUARTER 2022 MARKETING & SALES REVIEW Kenny Rocker Executive Vice President – Marketing & Sales 3 FOURTH QUARTER 2022 Bulk Revenue $1,933 (+7%) Volume 508K (-3%) ARC $3,799 (+10%) Major Markets Grain & Fertilizer Food & Coal & Grain Products Refrigerated Renewables 213 208 215 215 -2% Flat 48
Slide 3: Industrial and Premium
FOURTH QUARTER 2022 Industrial Revenue $1,999 (+5%) Volume 539K (Flat) ARC $3,711 (+5%) Major Markets Industrial Chemicals Metals & Forest Energy & & Plastics Minerals Products Specialized 196 181 157 151 +8% 137 140 -4% +2% 63 52 -17% 4Q 2021 4Q 2022 4Q 2021 4Q 2022 4Q 2021 4Q 2022 4Q 2021 4Q 2022
Slide 4: Economic Indicators and 2023 Volume Outlook
Economic Indicators Industrial Housing Light Vehicle Imports Exports Production GDP Starts (MM) Sales (MM) of Goods of Goods 2022 4.1% 2.0% 1.56 13.7 8.4% 7.0% 2023 (0.5%) 0.5% 1.19 14.8 (0.7%) 3.2% 2024 1.0% 1.8% 1.26 15.9 2.4% 5.2% 7 Source: IHS Markit U.S. Economic Outlook, January 2023 2023 Volu
Slide 5: Operations Review: Safety Culture Drives Injury Improvement
FOURTH QUARTER 2022 OPERATIONS REVIEW Eric Gehringer Executive Vice President – Operating 9 Safety Culture Drives Personal Injury Improvement Employee Safety (Reportable Personal Injury Incidents Per 200,000 Employee-Hours) -18% 0.98 0.80 2021 2022 Derailments (Reportable Derailment Incidents Per Mi
Slide 6: Building Network Resiliency; Key Performance Metrics
Building Network Resiliency Operating Inventory, Volume, and 2022 - Current Freight Car Velocity* Transportation Employee Hiring 201,334 1,302 Freight Car Velocity 211 196 171,406 Operating Car Inventory 177 157,863 154,417 154,438 589 Labor Day 7-Day Independence Volumes 140,663 Day Thanksgiving Ch
Slide 7: Key Performance Metrics; Increased Capital Plan Targets Growth
FOURTH QUARTER 2022 Key Performance Metrics LOCOMOTIVE WORKFORCE TRAIN LENGTH PRODUCTIVITY PRODUCTIVITY (Max on Route, in Feet) (GTMs Per HP Day) (Daily Miles per FTE) 9,319 9,191 1,046 1,010 129 123 4Q 2021 4Q 2022 4Q 2021 4Q 2022 4Q 2021 4Q 2022 3Q 2022: 124 3Q 2022: 1,045 3Q 2022: 9,483 Quarterly
Slide 8: 2023 Operating Success Drivers; Financial Review
2023 Operating Success Drivers World Class Safety Engagement Service Productivity • Enhance and drive robust • Improve quality of life for • Consistent and reliable • Recover lost productivity Safety Management agreement professionals • Increase resiliency • Pursuing tech enabled Systems process ini
Slide 9: Fourth Quarter Income Statement
Fourth Quarter Income Statement 2022 vs. 2022 2021 2021 Operating Revenues $6,180- $5,733- 8---- % Operating Expenses 3,768- 3,293- 14)--- Operating Income 2,412- 2,440- (1)--- Other Income 92- 83- 11)--- Interest Expense (333) (295) 13)--- Income Taxes (533) (517) 3 )-- Net Income $1,638 $1,711 (4)
Slide 10: Cost Structure Pressured by Fuel, Inflation; 2022 Full Year Results
Cost Structure Pressured by Fuel, Inflation and Resource Utilization Operating Expenses $ in Millions 14% $3,768 $8 $13 $1 $95 $3,293 $256 $104 10% 43% 18% 3% 2% Flat Compensation Fuel Purchased Equipment Depreciation Other & Benefits Services & & Other Materials Rents 4Q 4Q 2021 2022 19 2022 Full Y
Slide 11: Cash Generation, Balance Sheet & Shareholder Returns; 2023 Guidance
Solid Cash Generation Supports Strong Balance Sheet & Shareholder Returns Cash Returns to Cash From Operations ($ in millions) Shareholders ($ in millions) $10,091 $9,362 $9,441 $9,032 5% Reduction Cash Flow 93% Share Repurchases $7,291 $6,282 in Average Conversion* Share Balance 82% Dividends $2,80
Slide 12: 2023 Success Drivers
FOURTH QUARTER 2022 Lance Fritz Chairman, President & CEO 23 2023 Success Drivers Safety & Right Business, Service Right Price Reliability Rebuild & Invest Wisely; Engage Drive Efficiency 24
Slide 13: Cautionary Information
Cautionary Information This presentation and related materials contain statements about the Company’s future that are not statements of historical fact, including specifically the statements regarding the Company’s expectations with respect to economic conditions and demand levels, its ability to im